Interest-only loan calculator
On an interest-only loan the balance does not fall at first, then the principal is repaid over the remaining term.
Loading the tool…
Processing and privacy: The result is calculated inside your browser and your data is not sent to any server.
How to use it
- Enter loan amount, annual interest rate, interest-only period and total loan term.
- The result appears straight away and updates as you edit.
- Copy the result, or copy a link that keeps the same values to share it.
How it is calculated
Interest-only payment = P × r. Later payment = P × r ÷ (1 − (1 + r)^−(n − k)), with k interest-only months. Total interest = k × P × r + (n − k) × later payment − P.
Example
Inputs: Loan amount = 300,000, Annual interest rate = 6 %, Interest-only period = 5 years, Total loan term = 30 years. Result: Interest-only payment: 1,500.00; Payment after the period: 1,932.90; Total interest: 369,871.26.
Limits and caveats
- Assumes one fixed rate for the whole term, while many of these loans have variable rates.
- Leaves out fees and insurance.
Questions about this tool
Why does the payment jump after the interest-only period?
The whole principal is still owed and must be repaid over fewer months.
Does the balance fall during the interest-only period?
No, it stays the same unless you make extra principal payments.
When does this type of loan make sense?
When you need a low payment for a while and expect higher income later, and accept more total interest.